Philippine Stocks Drop Most in Asia on Valuations: Manila Mover

March 19 (Bloomberg) -- Philippine stocks fell for a
seventh day, sending the benchmark index to its longest losing
streak since November 2011.

The Philippine Stock Exchange Index sank 1.7 percent to
6,426.25 at the close in Manila, the biggest loss among Asian
markets. BDO Unibank Inc. slid 2.7 percent after the company
said it will not join a re-bidding for Export & Industry Bank.
Petron Corp. fell for a second day after reporting lower profit,
sliding 2.2 percent. San Miguel Corp., which controls Petron,
and Alliance Global Group Inc. lost more than 3 percent.

Shares in the Philippine stock index are valued at 18.5
times projected 12-month earnings. The multiple was at 19.5 on
March 11, the highest level dating back to at least 2006,
according to data compiled by Bloomberg. The MSCI Emerging
Markets Index trades at 10.5 times.

“The drop in Philippine equities is exaggerated by
valuations that continue to be be elevated,” said Jonathan
Ravelas, chief market strategist at BDO Unibank Inc. “Investors
are waiting for reasonable levels to come in which should be
between 6,000 and 6,200. There is no new fundamental story
domestically and the global risk has changed with the
development in Cyprus.”

The benchmark measure has fallen 6 percent during its
seven-day slide, paring this year’s gains to 11 percent. The
shares have risen this year on expectations the nation will win
an investment-grade sovereign rating, interest rates will stay
low and economic growth will accelerate.

“Foreigners aren’t around because of the risk scenario
triggered by the situation in Cyprus while locals are taking
money away in anticipation of the shortened trading next week,”
said Rico Gomez, who helps manage $2.8 billion at Rizal
Commercial Banking Corp. The nation’s markets will be shut next
Thursday and Friday.

The measure has surged 278 percent since October 2008,
making it the world’s biggest equity bull market. That’s at
least 126 percentage points more than every other bull market in
emerging and developed nations, data compiled by Bloomberg show.

Overseas investors have been net sellers in the past four
days, selling a total of $92 million of Philippine equities
since March 12, according to stock exchange data compiled by
Bloomberg. That’s the longest selling streak by overseas
investors since October. Overseas investors bought a net $2.55
billion of equities in 2012, a record since Bloomberg began
compiling the data in 2000 and helping fuel gains in the peso.

The Bangko Sentral ng Pilipinas cut interest rates on 1.86
trillion pesos of funds in special deposit accounts with the
central bank last week and signaled it may reduce this further
to contain gains in the peso, the best performing currency in
the past 12 months in the region and among emerging markets with
a 5.6 percent advance.